Domestic Debt and Service Sector Output in Nigeria: An Empirical Analysis (Published)
This study investigated the impact of domestic debt on service sector output in Nigeria from 1985 to 2023 using the Dynamic OLS model. The dependent variable was service sector output, while the explanatory variables were domestic debt stock, interest rate, government capital expenditure, and inflation rate and efficiency ratio. Data were obtained from the Central Bank of Nigeria (CBN) Statistical Bulletin and the National Bureau of Statistics (NBS). The series were subjected to Unit root and cointegration tests. The results of the Augmented Dickey Fuller showed that all the series were stationary at first difference 1(1). The cointegration test confirmed the existence of a long-run relationship among the variables. The findings of the study showed that domestic debt stock exerted positive significant impact on the service sector output. Interest rate and inflation negatively influence the service sector, while government capital expenditure and efficiency ratio exhibited negative significant effects. The study concluded that domestic borrowing, if prudently managed, could support service sector growth. The author recommended effective debt management and fiscal discipline to boost the service sector’s contribution to Nigeria’s economy.
Keywords: Domestic debt, government capital expenditure, interest rate Nigeria, service sector output